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BOJ May Change its Tune on Inflation

The Bank of Japan will consider moderating its language on inflation in a report this week to take account of the impact of lower oil prices, according to people familiar with central bank’s discussions.

The central bank may tone down or abandon its assessment that consumer-price gains are likely to “follow a rising trend again from the second half of this fiscal year,” according to the people who asked not to be named because the talks were private. Some officials see the potential for the BOJ to cut its inflation projections for the year through March and the following fiscal year, the people said.

While this adds to signs of waning momentum in the world’s third-biggest economy, the people said the effects of the 21 percent slump in oil prices since June are likely to pass. This will allow the BOJ to maintain its view that inflation is likely to hit its 2 percent target around the middle of the year starting in April 2015, they said.

Bloomberg [1]

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